Budget 2024 to focus on job creation, long-term economic vision, says Goldman Sachs

The Union Budget for fiscal year 2024-25 is unlikely to be populist, and the focus is expected to remain on employment generation and long-term economic vision, according to a note released by Goldman Sachs on Monday, July 8.

"We see an emphasis on job creation through labour-intensive manufacturing, credit for MSMEs, continued focus on services exports by expanding GCCs (global capability centres), and a thrust on domestic food supply chain and inventory management to control price volatility", the note said.

According to Goldman Sachs, the government was unlikely to resort to increased welfarism as there is limited fiscal space due to high public debt. The focus on capital expenditure will also remain unhindered as it has created long-term growth spillovers, it pointed out.

If allocations are increased for the existing welfare schemes, the government is unlikely to make any adjustments against the ongoing capex drive, it said. "Centre's robust capex CAGR of roughly 31 percent between FY21-24 has resulted in a growth spurt, while welfare spend has been a net drag since FY22", Goldman Sachs said.

Eye on 2047

According to Goldman Sachs, the first budget under the third tenure of Prime Minister Narendra Modi will focus on a long-term economic vision for the year 2047, which will mark 100 years since India's Independence.

"We think this budget will go beyond just fiscal numbers, and likely make an overarching statement about long-term economic policy of the government towards 2047," it said.

“In the upcoming session, the government will introduce its first budget for this term. This budget will be an impressive document of the far-reaching policies and futuristic vision of the government. In this budget, along with major economic and social decisions, many historical steps are also to be seen,” the President said, while addressing a joint session of the Parliament on June 27.